What happened
Shares of the large payments firm PayPal (PYPL -1.83%) traded about 1.15% higher as of 3 p.m. ET after a Wall Street analyst said he thinks the stock has been oversold.
So what
The harsh, rising interest-rate environment and the bleak economic outlook have crushed tech stocks this year, and PayPal has not been spared, with its stock down more than 56% this year.
Recently, the platform faced backlash after the company issued a revised acceptable-use policy that said it could fine users as much as $2,500 for spreading misinformation on the platform.
Shortly after, PayPal withdrew the language and said it had made a mistake, but shares are down more than 9% this week after a #DeletePayPal hashtag started trending on Twitter.
Jefferies analyst Trevor Williams believes this reaction will be short lived and is likely to have minimal impact on the company. Williams in a research note said that only about 70,000 Twitter users engaged with the hashtag over the weekend, which is a minuscule number compared to PayPal's 400 million users.
In a statement, Williams said:
If action taken by consumers in response to the policy update/retraction is isolated to those that voiced displeasure via social media (or even a multiple of those that did), we would not expect there to be any noticeable impact on Net New Active Accounts.
Analysts currently expect PayPal to add 3.7 million new accounts in the third quarter and 4.5 million in Q4. Williams has assigned PayPal a "hold" rating and a price target of $93, with the stock currently hovering below $85.
Now what
With hundreds of millions of users, PayPal has amassed scale that few competitors will be able to replicate, and payments are only going to get more digitized in the future. With the stock trading at four-year lows, I think it is a good, long-term buy.
